SUMMARY
- Citadel Securities LLC fined $7 million over order marking mishap.
- Coding error in their automated system caused short sale mislabeling for five years.
- Goldman Sachs also faces SEC's wrath with a fine for flawed data submissions.
The U.S. Securities and Exchange Commission (SEC) slapped a hefty $7 million fine on Citadel Securities LLC. Why? For tripping up on order marking rules.
Over a span of five years, from 2015 to 2020, Citadel marked a multitude of short sale orders incorrectly. Instead of labeling them as short sales, they marked them as long and, sometimes, the other way around. The culprit? A pesky coding error within their automated trading system.
In defense, Citadel’s mouthpiece conveyed to CNBC, “We’re not perfect, but this didn’t affect our client services.” They further explained, “A minor code switch affected a tiny portion of our orders. The good news? We caught it and fixed it three years ago.”
For those who just dived into the world of stocks, short sales are akin to borrowing a book, selling it, and then buying it back cheaper to return it, pocketing the price difference. Mark Cave, one of SEC's top guns, emphasized the significance of adhering to these marking rules. It’s crucial in keeping a check on market shenanigans, especially shady practices like 'naked' short selling. Not following the rules can blur the Commission's view of market activities.
And, plot twist! On the same day, Goldman Sachs found itself in hot water with the SEC, being fined for blunders in their “blue sheet” data submissions.
WOM Money Picks
Be a part of the winning team | 81% Success Rate.